Some recent articles ("Google's House of Cards" "A Perfect Storm for Pay Per Click") have been saying that the ROI for paid advertising is going away. It has been. It was not very competitive a few years ago, but now with over 150,000 people in the market you need to be more effective to extract profits from a campaign.
I honestly think many of the articles are suggested / written by people who want to make their own jobs easier and make more money while doing it. Some articles may even be written to scare away competition or drive leads to firms who provide the services.
In the past a sloppy website with low conversion rates was ok because there was little competition. Now some areas are requiring a smooth ad, which is well targeted, that leads to a smooth site, which has great usability, and is customer centric. In essence the shakeup of the organic listings and the rising costs of pay per click ads are forcing websites (and the internet as a whole) to be more functional.
There are few mediums which have feedback as rapid as AdWords does. Pay per click is here to stay. Those who know how to use it will make a ton of money.
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